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Navigating your Family Business from Conflict to Accomplishment

by Marc Celentana, PhD on Jul 09, 2018 9:50:47 AM

When working with family members in business with one another, something reveals itself over and over – the ties that bind also serve as stress points for potential unraveling.  With expertise in group and family dynamics, conflict management, and behavioral science, I am often asked to provide consultation and coaching to Trilogy clients with family-owned businesses who recognize that “things could be better” from both business and personal perspectives.  Does your family experience any of these issues causing conflict and misunderstanding?

  • Decisions about the future direction of the business.
  • Differences in leadership styles, practices, and core business values.
  • Permitting undesirable and potentially destructive workplace behaviors to (erroneously) maintain harmony.
  • Differences in performance and time commitment.
  • Compensation of those actively vs. passively involved in the business.
  • Fairness, equity and expectations around time off/time away from the business with maintenance of core business activities.
  • Agreement about reinvestment of profits and the payment of dividends.
  • Clarification on how family shareholders exit the business and agreement on the basis valuation of shares in the business.
  • Identifying the next generation of leadership.
  • And, quite possibly the hardest to do but most important to address: the inability to have radically candid conversations to address ‘past hurts’ and ensure communication free from anger, spite, and/or indifference.

If not addressed in a timely fashion, any of the above concerns can accelerate loss of reputation, structure, and wealth.  However, with a thoughtful and comprehensive evaluation including collective business goals and individual hopes and dreams, there are options to increase success, satisfaction, and engagement for your family.  Below, are four approaches proven to minimize conflicts and misunderstandings:

  1. Establishing formal and informal rules for family member engagement. Creation of a family council or shareholders’ group allows establishment of a set of rules based on shared values to address key ownership issues. When seeking guidance around particularly thorny issues, this formal structure is invaluable. These values are often referred to as the family constitution.  Equally important are the informal rules that speak to the ways family members want to behave with one another. These behaviors are often referred to as the family working agreement.
  2. ‘Baking-in’ the concept of fairness and the practice of conflict resolution into all family business activities. A highly emotional response by a member feeling that others are benefitting at the expense of the family business can easily create an inhospitable environment for success. Commitment to fairness assumes that family members both appreciate how perception of inequality – of time, effort, resources, etc. – can undermine progress, and, requires a method to resolve these differences. Through the adoption of conflict resolution techniques, your family will be able to deal with business matters in a fair and equitable manner.
  3. Investing in leadership and board coaching for those actively engaged in the business. Running a family business can feel like an interminable walk about a tightrope. Competition, increased product and labor costs, shifting regulatory environment, changes in technology, problem du jour, you name it…all serve as challenges, as well as, opportunities for savvy family business leaders.  Coaching, whether it is at the level of the individual, executive team, or family board, provides high level thought partnership, creative problem-solving solutions, and can re-energize your view on yourself and others in the work.
  4. Evaluating the next generation using a thoughtful and disciplined approach. As tempting as it may be to believe that your son, daughter, niece, nephew, son-in-law, daughter-in-law, is the “perfect fit” to propel forward the interests of the family business, research and experience suggests there is much more nuance in making a good decision. While experience working in the business, ideally that which is both broad and deep, is desirable, there exist several other factors that relate to successful succession. Assessment by a competent evaluator can provide deep information about interest in taking on expanded responsibilities, possession of necessary skills sets, aptitude for requirements of the role, and, prediction about long-term success.

If you would like to learn more about how you can minimize conflict to increase growth and success in your family business, please contact Trilogy Alliance Partner Marc Celentana at (609) 688-0428 or mcelentana@gettrilogypartners.com.

 

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